Landlord’s to pay for EPC improvements, with the “no cost” exemption to be removed

Posted on November 9, 2018.

Landlords will have to fund some of the changes needed to make their rental properties compliant with minimum energy efficiency requirements.

The Government is to introduce the payment requirement, capped at £3,500.

This replaces the current “no cost” exemption which allowed landlords to avoid implementing energy efficiency measures if there is no funding available to recoup their costs.

Instead, they will have to contribute up to the £3,500, including VAT, from next year.

It follows a consultation on minimum energy efficiency standards that closed in March.

A statement from the Ministry of Housing said the new regulations would speed up the process of ensuring rental homes meet the minimum Energy Performance Certificate (EPC) rating of E.

Upgrading is expected to cost £1,200 on average and will affect 290,000 properties, which represents around 6% of the overall domestic market, the announcement said.

The new regulations will also remove an exemption that landlords could use where tenants refused Green Deal funding that would increase their energy bills.

Landlords will instead have to fund the works up to the capped level.

Claire Perry, energy and clean growth minister, said: “While the vast majority of landlords take great pride in the properties they own, a minority still rent out housing that is difficult to keep warm.

“Upgrading these homes so they are more energy efficient is one of the most effective ways to tackle fuel poverty and help bring down bills for their tenants, saving them £180 a year.”

Heather Wheeler, housing minister, said: “This builds on our ongoing work to crack down on the small minority of rogue landlords and drive up standards in the private rented sector, including through our reviews of health and safety standards and carbon monoxide alarm requirements in the home.

“Most landlords will be unaffected by the changes as their properties are already compliant. Where upgrades are necessary, the average cost to improve an F or G rated property to a band E is expected to be around £1,200 – far below the upper ceiling being brought forward under new regulations.

“Examples of measures include: installing floor insulation, low energy lighting or increasing loft insulation. If upgrades will cost more than £3,500, landlords will be able to register for an exemption.

“The measures will come into force during 2019 and will affect around 200,000 landlords, some of whom will still have access to a variety of funding schemes.

“This includes support from the Energy Company Obligation scheme and local grants to bring their properties up to the required standard.

“These measures will help to ensure the housing and energy market works for everyone by bringing greater fairness to energy costs and making renting fair and more transparent for all.”

Commenting on the move, David Cox, chief executive of ARLA Propertymark, called for the reintroduction of the Landlords’ Energy Saving Allowance.

He said: “Over the past few years, the financial burdens faced by landlords have increased time after time, which is pushing rent costs up and driving buy-to-let investors out of the market.

“Under the Energy Act 2011, the Government pledged to avoid any ‘upfront costs’ for landlords – a principle which has been disregarded by setting the cap as high as £3,500.

“The Government should now show its support for landlords by reintroducing the Landlords’ Energy Saving Allowance (LESA) and extending it to include anything contained within the recommendations report of an EPC.”